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Will Tesco's tailor-made deals make tills ring?

The supermarket's planning to base promotions on the affluence of families in the local area. Jack of all trades, etc...

by Emma Haslett

Published: 23 Jan 2012

Last Updated: 06 Nov 2012

This is either ingenious, or a case of Tesco having its cake and trying to scoff it at the same time: the supermarket has just released details of plans to base promotions and discounts on the incomes of the people living around it, according to The Grocer. So while those living near the Rochdale branch will be encouraged to buy Value orange juice drink, those living in Notting Hill Gate will find themselves targeted with ads for Finest Fresh Pure Organic Orange Juice. That puts it in direct competition with the likes of Aldi, Lidl etc in poorer areas, and Waitrose and M&S in richer areas.

The move follows a pretty nasty set of Christmas trading results for the supermarket: it issued its first profit warning for two decades after sales dropped by 2.3% in the six weeks to January 7, which means the much-hyped Big Price Drop campaign failed to make the impact the company had clearly been hoping for. (Although Tesco insisted that this was partly because its price-cutting had been so feverish that it had actually caused ‘a deflationary effect’).

Tesco’s main problem over the past couple of years has been that while less well-off customers have defected to Iceland, Aldi and Lidl, its richer customers have traded up to Sainsbury’s, Waitrose and M&S – leaving Tesco slap bang in the middle. But is the plan to be all things to all men wise? After all, it’s arguable that Woolworths attempted to do the same thing – and look where that ended up.

The supermarket was keen to point out, though, that this is merely a slight change from the way it already does promotions: at the moment, it tailors its promotions to the shopping habits of customers in particular areas, based on how they use their Clubcards. And it promised that although different products will be promoted in different areas, the prices of everyday staples will stay the same. So wherever you are, from Land’s End to John O’Groats, your carrots should cost the same.